In 2016, the start-up “Boom”, among others, announced to be in the process of developing a supersonic aircraft that would already have its first commercial flight in 2023 and that will fly passengers from London to New York in 3 hours and 15 minutes. Hence, it seems that the first airline that will adopt supersonic jets back after British Airways and Air France retired the Concorde in 2003 will enjoy a significant advantage of flying “ultra-long-haul” 2.6 times faster than competitors, which will allow them to steal the most profitable business and premium passengers. Will Emirates Airlines take the reins?

1. Competitive Strategy, IE Business School MIM F3 2017, Team C
The threat of supersonic flights to Emirates Airlines
Analysis of the strategic issue and its alternatives

2. Agenda
1. Long-haul industry analysis
2. Emirates Airlines: Company
3. Strategic Issue
4. Alternatives
5. Recommendation
The threat of supersonic flights to Emirates Airlines Competitive Strategy, IE Business School MIM F3 2017, Team C

3. Long-haul industry analysis
Analysis of Porter’s 5 forces
The threat of supersonic flights to Emirates Airlines Competitive Strategy, IE Business School MIM F3 2017, Team C
Suppliers
Duopoly of Airbus and Boeing
holds 66% of market.
New entrants in the supersonic
run: Boom has 76 orders.
Substitutes
Inexistent, which makes
demand inelastic.
New entrants
Industry has been liberalized.
Buyers
Purchase based on cost and
availability.
Business passengers are the
most profitable.
Rivalry
LLC are entering long-haul,
which is 90% of FSC profit.
Competition is moving towards
“ultra-long-haul”.

4. The threat of supersonic flights to Emirates Airlines Competitive Strategy, IE Business School MIM F3 2017, Team C
Emirates Airlines: Company Analysis
6 years old
40% more capacity than
competitors
FLEETFINANCIAL RESOURCES
Resources and capabilities
EUROPE
EAST ASIA &
AUSTRALASIA
AMERICA
% of $22.8b
in revenues
OPERATIONS
0,08
0,11
Emirates IAG
17% lower costs
per seat km

5. The threat of supersonic flights to Emirates Airlines Competitive Strategy, IE Business School MIM F3 2017, Team C
Emirates Airlines: Company Analysis
Most valuable
airline
(Brand Finance, 2016)
SERVICESBRAND
Resources and capabilities
Longest flights in the world
from Dubai
LOCATION AND NETWORK
17hrs.

6. The threat of supersonic flights to Emirates Airlines Competitive Strategy, IE Business School MIM F3 2017, Team C
Emirates Airlines: Company Analysis
Most valuable airline brand
premium fleet and services
operating non-stop flights via the
longest routes
DIFFERENTIATION
Competitive Advantage
BrandMarketing
Human Resources
Maintenance
Financial Resources
Flight Operations
Strategic Importance
Cabin Services
Short-haul
Relative Strength
Fleet
Location and Route Network
Key WeaknessesInconsequential Weaknesses
Key StrengthSuperfluous Strength
Low High
LowHigh

7. The threat of supersonic flights to Emirates Airlines Competitive Strategy, IE Business School MIM F3 2017, Team C
Suppliers running to bring
supersonic flight back
Emirates runs the longest flights in the world (16-17h)
Emirates reduces costs flying super-sized planes
and offers premium beds, showers, lounges
Strategic Issue
A supersonic flight is one
that is faster than sound
speed: 2.6x faster than a
regular plane
Supersonic aircrafts hold 55
seats with short-haul
dimensions
FSCs focus in “ultra-long-haul”

8. The threat of supersonic flights to Emirates Airlines Competitive Strategy, IE Business School MIM F3 2017, Team C
Strategic Issue
Will supersonic flights be a threat to
Emirates long-haul? Should the firm enter the market
?

9. The threat of supersonic flights to Emirates Airlines Competitive Strategy, IE Business School MIM F3 2017, Team C
Not entering supersonic flight market
Using DUBAI airport
Using LONDON airport
1
Using SINGAPORE airport
Alternatives
Entering supersonic
flight market
2

10. The threat of supersonic flights to Emirates Airlines Competitive Strategy, IE Business School MIM F3 2017, Team C
Assumptions of alternatives
Assumptions when calculating market sizes, costs and breakeven:
15 to 30% of business travelers will change to
supersonic
Supersonic cost per seat km is equal to regular
cost of business class seat km (x3 economy seat)
A supersonic aircraft has a capacity of 55
passengers
The prices of the supersonic tickets are the ones
set by Boom, equivalent to regular business class

11. The threat of supersonic flights to Emirates Airlines Competitive Strategy, IE Business School MIM F3 2017, Team C
Alternative 1: Not going supersonic
Supersonic is banned over land, and biggest share of Emirates’ revenue comes from Europe
29% Emirates’ revenue is Dubai-
Europe inland
Emirates’ premium value propositions is
not feasible in supersonic
First movers can steal premium
passengers through loyalty plans.
Not a threat in the ST & MT Threat in the LT
ADVANTAGES DISADVANTAGES

12. The threat of supersonic flights to Emirates Airlines Competitive Strategy, IE Business School MIM F3 2017, Team C
Alternative 2: Going supersonic
First movers can steal premium passengers through loyalty plans
Aligned with Emirates’ goals and values
Current business model is based on
super-sized planes
Risk
ADVANTAGES DISADVANTAGES
Emirates’ premium value propositions is
not feasible in supersonic
Investment is feasible
First mover advantage of flying faster

13. The threat of supersonic flights to Emirates Airlines Competitive Strategy, IE Business School MIM F3 2017, Team C
London airport analysis
According to the AIA, the supersonic market will have its nucleus in London
L
ADVANTAGES DISADVANTAGES
London-NY connects financial hubs and
was the most profitable for Concorde
Market size: 1 to 2 million passengers
Breakeven: 65% of aircraft capacity
Brexit shrinking business passengers
Capex to create a base in London
Not big player in American market
Emirates is cutting flights to US due
to anti-Islamic policies

14. 3rd busiest airport in the world,
growing at 15% rate
Home and current hub of Emirates
DBX-BKK is in top 10 of busiest routes
Breakeven: 65% of aircraft capacity
The threat of supersonic flights to Emirates Airlines Competitive Strategy, IE Business School MIM F3 2017, Team C
Dubai airport analysis
D
Dubai is Emirates’ current hub and the 3rd busiest airport in the world
ADVANTAGES DISADVANTAGES
Smaller market (0.6 to 1.3m) due to
limited overseas route choices
Europe can’t be served
North Asia and America can’t be
served without a layover

15. S
The threat of supersonic flights to Emirates Airlines Competitive Strategy, IE Business School MIM F3 2017, Team C
Singapore airport analysis
Asia is the largest and fastest growing business travel region
ADVANTAGES DISADVANTAGES
Europe can’t be servedLargest and fastest growing business
travel region
Current Emirates’ base
Market size: 1 to 2.2 million passengers
Breakeven: 63% of aircraft capacity
Strategic location to serve also
America

16. S
D
The threat of supersonic flights to Emirates Airlines Competitive Strategy, IE Business School MIM F3 2017, Team C
Recommendation
Entering combining Dubai and Singapore airports
NOT ENTERING
ENTERING USING
LONDON
DUBAI +
SINGAPORE
Market share
losses in the LT
1 to 2 m
passengers
Sum up 1.6 to
3.5 m pass.
Key market for
supersonic but
not for Emirates
Serves all
regions except
Europe
Current hub +
base to sleep
Capex to build a
base
Fast
growing
0.6 to 1.3 m
Strategic
location
1 to 2.2 m

17. The threat of supersonic flights to Emirates Airlines
Competitive Strategy, IE Business School
MIM F3 2017, Team C
Antonio Auricchio
Bárbara Fontela
Avaneesh Goel
Yuxiang He
Clemens Jungmair
Andrea Roa